Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products.

During September, MCP produced and sold 1,000 units using 2,200 pounds of direct materials at an average cost per pound of $2.00 and 360 direct labor hours at an average wage of $15.15 per hour.
The direct material efficiency variance during September is ________.
A) $660 favorable
B) $660 unfavorable
C) $460 favorable
D) $460 unfavorable

Question

Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products.

During September, MCP produced and sold 1,000 units using 2,200 pounds of direct materials at an average cost per pound of $2.00 and 360 direct labor hours at an average wage of $15.15 per hour.
The direct material efficiency variance during September is ________.
A) $660 favorable 
B) $660 unfavorable 
C) $460 favorable 
D) $460 unfavorable

Quizplus · Accepted Answer

Direct material efficiency variance = $2.30 × [2,200 - (1,000 × 2)] = $460 U